New Delhi: Japanese telecom firm NTT DoCoMo on Friday said it has moved a United States district court to force its estranged Indian partner Tata Group to pay $1.2 billion awarded as damages by an international arbitration for breach of contract.
Tata Sons said that it will resist enforcement of the arbitration award in India as also other jurisdictions as it has been barred by Indian law and public policy for paying damages awarded for breaching a contract to buyback DoCoMo shares in their joint venture at a pre-agreed price. “DoCoMo has taken a further step to enforce the London Court of International Arbitration (LCIA) award against Tata by commencing action in the United States District Court for the Southern District of New York,” Japan’s largest telecom firm said in a statement.
It believed that the decision of LCIA that Tata has breached its commercial agreement, and owes DoCoMo $1.2 billion in damages is enforceable in any country, which is a signatory to the New York Convention, including the United States. “Until, DoCoMo receives the full amount due, it will continue to seek enforcement globally,” the statement said. Tata Sons said it has from outset emphasised its “commitment to honouring its contractual obligations to DoCoMo in accordance with the applicable law.”
“Tata Sons maintains the same position with respect to the award. However, performance of the award requires the approval of the Reserve Bank of India, which to date has been denied on the basis of pre-existing regulations that are fully in the knowledge of DoCoMo. “Until it has been authorised to proceed with payment by the relevant Indian legal authority, Tata Sons has been advised that enforcement of the award would be contrary to Indian law and public policy,” the statement said. On that basis, Tata Sons said it is “resisting enforcement in India and will resist enforcement in any other jurisdiction DoCoMo files for enforcement.”
It further said it has already placed the full amount awarded to DoCoMo in the arbitration—$1.17 billion, in cash with the high court of Delhi, where DoCoMo has previously filed for enforcement of the arbitral award and the entire issue is pending adjudication.
In November 2009, DoCoMo had acquired 26.5% stake in Tata Teleservices for about Rs.12,740 crore (at Rs.117 per share). This was as per a 2008 understanding that in case it exits the venture within five years, it will be paid a minimum 50% of the acquisition price.
Meanwhile, Tata Sons said in a statement that it filed evidence in support of its 5 September, 2016 application before the English High Court of Justice. The application seeks to set aside the court’s 25 July ex-parte order that granted NTT Docomo Inc. leave to enforce the LCIA arbitral award.
Tata Sons’ evidence outlines the grounds on which enforcement of the award will be resisted by Tata Sons. These include: first, that Docomo has not validly tendered its shares in Tata Teleservices Limited to Tata Sons, which is a necessary condition precedent to payment by Tata of the sum awarded by the arbitral tribunal; and secondly, that performance of the award without approval by the Reserve Bank of India would be illegal under Indian law and/or contrary to public policy, said the statement